Eight Garden Grove residents are calling on a Sacramento County judge to block a state decision denying nearly $140,000 in relocation money to 30 displaced families.
The state Department of Finance earlier this month rejected payments to evicted residents of the former Travel County RV Park in Garden Grove, who were displaced from their homes when the city seized the property for the construction of a 600-bedroom hotel and waterpark resort.
The residents first sued the city of Garden Grove in 2009 over how much they should be compensated for losing their homes. Four years later, they eventually came to a settlement requiring the city to pay the relocation money and construct replacement affordable housing units.
But with the elimination of redevelopment agencies statewide in 2011, both the city's waterpark hotel project and payments to the displaced residents have hit new complications.
The Department of Finance rejected funding for the relocation payments earlier this month, arguing that in general, the agency lacked the authority to enter into that settlement, which was approved by an OC Superior Court judge in September 2013 and "retroactively approved" by the city's Oversight Board in 2014, according to a letter from state officials to the city.
They also said the construction of new affordable housing units must be financed through the city's Housing Authority, not the former redevelopment agency.
H.D. Palmer, the department's spokesman, said the state has yet to file a response to the residents' court action.
But the nonprofit law groups representing the RV park residents argue the state is wrongfully using the law to deny residents the money.
"We think that the law is clear. As a part of the agreement for the Waterpark to be built, the agency had to follow all applicable state and local laws for displacement housing," said Nisha Vyas, an attorney for Public Counsel, one of the nonprofit organizations.
For decades, cities have used redevelopment agencies to divert property tax revenue toward special projects and other uses intended to reduce blight.
Garden Grove's redevelopment agency seized a number of properties along Harbor Boulevard, including the RV Park and other low-income housing, to build hotels, pitching the plan as an economic engine that would draw Disneyland Resort visitors out of nearby Anaheim and into Garden Grove.
But following a major state budget crisis, Gov. Jerry Brown dissolved the agencies in 2011 to recapture portions of that tax revenue for the state, requiring cities to wind down their current affairs and not issue any new debt.
The Great Wolf Lodge Waterpark Hotel resort, one of Garden Grove's major projects, has continued to move forward with $45 million in financing approved late last year and a groundbreaking in May.
Vyas said what her clients were owed were a "drop in the bucket" compared to the $45 million in bonds that the state approved for the project already.
She called the state's rationale for rejecting the money "vague" and said laws passed by the state following the dissolution of redevelopment agencies account for such court judgments and settlements.
Their request for a temporary restraining order would prevent the state from using the $140,000 in question until their complaint is resolved.
"The city really views this project as an economic engine. And we think that our clients who lived in Garden Grove for years should be able to share in that prosperity," said Michael Soller, communications director for Public Counsel.
Although only eight people are included in the suit, the relocation payments would affect 30 low-income families, Soller said.
Vyas noted that many of the affected residents still live in Garden Grove, have low- to very-low incomes, and are relying on the relocation payments to improve or stabilize their living conditions.
Many could not afford to transport their mobile home and lost those investments, she said.
"Alfredo Cordero, a senior and veteran of the Navy, he'd been there 26 years and is now renting a room in a shared trailer at another park," Vyas said. "He's owed over $10,000, which he's relying on to bring some stability into his life."
Another client, Marina Limon, has since moved to a trailer home in Santa Ana where she pays $600 more in rent.
"She wants to return to Garden Grove to be closer to her family and community, and really misses it," Vyas said of Limon. "Some people lived there for over a decade -- that's their turf, their homes, their support network."
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